Commitment Model

Date: Jan 23, 2019
By: Joel Lazer, FCPA, FCA, CIRP

From 1994 to 2009 two business professors at Stanford University, California, gathered data on start-up technology companies.  James Baron and Michael Hannan hypothesized that it did not matter how great the product nor how loyal the customers – the company could not last unless employees trusted one another.

From the data, they concluded that company cultures fell into one of five categories:

  1. Star model – hires the elite and provides lots of autonomy;
  2. Engineering model – engineers sway decisions and focus on solving technical problems;
  3. Bureaucracy model – has extensive job descriptions, employee handbooks, weekly meetings often communicating firm values;
  4. Autocratic model – best summarized by a CEO who said, “You work. You do what I say.  You get paid;” and
  5. Commitment model – values represent slow and steady growth where getting the culture right is more important than designing the best product.

They found:

  1. Star firms
    1. produced some of the biggest winners,
    2. failed in record numbers,
    3. are least likely to make it to an initial public offering, and
    4. are subject to significant internal rivalries.
  2. Commitment firms
    1. were the most consistent winners,
    2. did not fail,
    3. were the fastest to reach an initial public offering,
    4. reacted faster to market shifts, and
    5. invested heavily in training.

I believe that at Lazer Grant, we have some of all the culture categories.  Predominantly, we have commitment and some star qualities.  We have some characteristics of the bureaucracy model, and periodically we can drift to autocratic.  We have little engineering.

Awareness is important.  If you know who you are, you have an opportunity to become what you would like to be.  Your culture defines you.  This study concludes your culture will define your success.

Take the time to consider who you are.  We would be delighted to assist, in either the assessment of your current culture or to assist you to get to where you want to be.

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